The purchasing power of each dollar over time _____
A) varies inversely with the economy's price level.
B) varies directly with the economy's price level.
C) is unrelated to the economy's price level.
D) depends upon the size of the national debt.
E) depends upon the level of government expenditures.

Question

Quizplus · Accepted Answer

The purchasing power of each dollar over time varies inversely with the economy's price level. This is because as the price level increases, each dollar can purchase fewer goods and services, leading to a decrease in purchasing power. Similarly, as the price level decreases, each dollar can purchase more goods and services, leading to an increase in purchasing power.

The Purchasing Power of Each Dollar Over Time _____